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Technology-induced Trade Shocks? Evidence from Broadband Expansion in France

Clément Malgouyres (), Thierry Mayer () and Clément Mazet-Sonilhac
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Clément Mazet-Sonilhac: IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris, Centre de recherche de la Banque de France - Banque de France

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Abstract: In this paper, we document the presence of "technology-induced" trade in France between 1997 and 2007 and assess its impact on consumer welfare. We use the staggered roll-out of broadband internet to estimate its causal effect on the importing behavior of affected firms. Using an event-study design, we find that broadband expansion increases firm-level imports by around 25%. We further find that the "sub-extensive" margin (number of products and sourcing countries per firm) is the main channel of adjustment and that the effect is larger for capital goods. Finally, we develop a model where firms optimize over their import strategy and which yields a sufficient statistics formula for the quantification of the effects of broadband on consumer welfare. Interpreted within this model, our reduced-form estimates imply that broadband internet reduced the consumer price index by 1.7% and that the import-channel, i.e. the enhanced access to foreign goods that is allowed by broadband, accounts for a quarter of that effect.

New Economics Papers: this item is included in nep-eur
Date: 2019-06
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02160268
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Working Paper: Technology-induced Trade Shocks? Evidence from Broadband Expansion in France (2019) Downloads
Working Paper: Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France (2019) Downloads
Working Paper: Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France (2019) Downloads
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